Grading reports that make inflated or unsupported claims about diamond quality could be considered deceptive, and jewelers who sell them could be held legally liable, the Jewelers Vigilance Committee said in a “members alert” responding to the recent controversy over lab reports.

She argues that if a report represents grades with the standard GIA nomenclature, a reasonable person could assume that the lab is using the standard industry definitions for those grades. So if the lab evaluates diamonds in ways that diverge from that standard—for instance, if the lab looks at color faceup, as some do—then that needs to be spelled out to the consumer, she says.

The lab “needs to clearly disclose the fact that they are grading diamonds using a methodology that differs from the industry norm,” she says. That disclosure should be included on the report, she adds.

The statement admits that grading can be subjective, and the industry has traditionally allowed for a “one grade tolerance.” But anything beyond that risks legal sanction, the alert says.

“Labs that routinely produce reports that exceed the accepted tolerance, particularly when the deviation is always on the high side, are likely engaging in a pattern and practice of deception,” it says. “This exposes the lab (and the sellers who use these lab reports) to government enforcement action as well as class actions brought by consumers or Lanham Act lawsuits brought by competitors [and] exposes the entire buying public to a crisis in confidence.”

The alert also cautions against one common industry practice—using the term certificates for grading reports.

“Since most diamond grading reports are not externally reviewed or otherwise certified by an independent body, they are not usually correctly identified as certificates,” it said. “These documents should be referred to as grading reports.”